Is the plan to go to 100% MLI and by when?
Yes, the intention is very much to become a 100% MLI business. At present we are targeting to be 60-65% MLI by March 2020, with the remainder of the transition taking place over the following two years.
What are Stenprop’s long-term plans with regards to leverage?
The current target is to reduce our leverage to no more than 40% by March 2020. Once we reach this milestone, we will reassess our target going forward and decide whether it is prudent to reduce it further.
Does Stenprop still see value in MLI? / Can Stenprop still buy at attractive prices?
Yes, we still believe strongly in the MLI sector in the UK. We see limited potential for further yield compression, but at current levels are still able to buy at yields which are accretive to earnings. Supply of MLI units is constrained and we continue to experience strong occupier demand which is resulting in reduced voids and meaningful rental growth across our portfolio. We see this as a key driver of performance going forward. On average we are still paying around 50% of replacement cost value for existing MLI estates which means there is no economic case to justify development of new supply at these levels. At the same time as supply is restricted, the structural increase in tenant demand continues driven by the rise of e-commerce and enhanced communication technologies. Read more about our business model.
How are the directors’ interests aligned with investors?
The directors are incentivised by a combination of short and long term plans to align their interests with those of investors. The short-term plan focuses on the Company targets for the next 12 months, with 20% awarded for personal performance, while the long-term plan rewards delivery of the Company’s longer-term goals and is 100% linked to Company performance. The directors of Stenprop are also the largest single block of shareholders on the register owning c. 7.5% of the issued share capital, which ensures that their interests and shareholder interests are fully aligned at all times. Find more detail in our investor section.
How is technology impacting upon operations?
We use technology extensively within our operating platform to improve efficiency, cut costs and enhance customer service. For example, we are using a tool which digitises the leasing process. This technology has greatly enhanced communication between our internal and external teams, reducing delays, errors and confusion and resulting in a significant reduction in the time taken to go from agreeing terms to signing documents. We have also relaunched the industrials.co.uk website over the course of the last year which is now receiving more than 120,000 page views a year and generating a high number of prospective letting opportunities. The site is heavily targeted towards digital marketing channels, reaching new customers in ways superior to traditional property marketing campaigns. The combination of technology and our on the ground presence will be key to delivering class leading revenue growth over the next few years.